Global IPO underpricing during the Covid-19 pandemic: The impact of firm fundamentals, financial intermediaries, and global factors

Abstract

We investigate the impact of the Covid-19 pandemic on global IPO underpricing. Using a sample of 6113 IPOs from 32 countries, we find that firms issued during the pandemic have 17.6% more underpricing than those issued before the pandemic. We also analyze the effect of firm fundamentals, financial intermediaries, and global factors on pandemic-era underpricing. Firms with strong fundamentals and backed by reputable underwriters have higher underpricing during the pandemic. Furthermore, better country-level shareholder protection and ESG performance reduce underpricing, while higher economic policy uncertainty increases underpricing during the pandemic. Government economic support positively affected underpricing during the pandemic.